Tax authorities scrutinising farm income over Rs 1 cr

Tax authorities are concerned some assessees may be passing off their unaccounted money as agriculture income, which is exempted from tax in India.

Taxman inspects farm incomes over 1-Cr. Picture [Representational Image] Farmers plant rice seedlings in a field near a residential compound in Shaxi township, Guangdong province March 29, 2015. China on Monday courted home buyers with a bigger tax break as it cut downpayment requirements for the second time in six months, stepping up a fight against sliding house prices that is imperiling the world's second-biggest economy. Picture taken March 29, 2015.

A public interest litigation (PIL) filed with the Patna High Court on a few income tax assessees passing off their unaccounted money as agriculture income and thereby claiming exemptions as well as indulging in money laundering has come under the scanner of tax authorities, the Business Line reported.

Union Finance Minister Arun Jaitley too said Tuesday in Parliament that many prominent people are being investigated for concealment of taxable earnings as agricultural gains.

Though agricultural income is exempt from tax in India, it is used for rate purpose to calculate tax liability of an individual whose non-agricultural income exceeds the tax threshold, the daily said.

The Central Board of Direct Taxes (CBDT) in a recent letter to its field offices said: "It has been noticed that several assessees have declared income from agriculture of more than Rs 1 crore in the income-tax returns filed for earlier years, especially from assessment years 2011-12 to 2013-14."

The data with the tax department indicates that there were 2,746 cases showing agri-income above Rs one crore between 2006 to 2016 assessment years. And 1,080 cases of which were for the three years between 2011 and 2014.

The authorities were concerned with possible misreporting and tax evasion, therefore wanting to check the veracity of high agricultural incomes claimed by assessees in their report, the Business Line reported.

It added as a genuine concern that in some high-value tax payments, the taxpayers may have filled in wrong fields in the income tax returns.

The CBDT on its part has asked the assessing officers to check both for the data entry mistakes while filling returns and, where assessment is complete, to check the existing records. And in cases where scrutiny proceedings under Section 143(3) of the Income-Tax Act are underway, it has ordered a thorough verification of claims.

The board has also sought for a full report on such income tax claims by March 20 to submit the same to the court.